Tor is an overlay network that lets you browse and use other TCP based services anonymously. Normally if you use a secure tunnel an observer can still see the destination and origin ip addresses; They may not be able to tell what the payload is, but they will be able to tell who is talking. Onion routing uses a series of encrypted hops to hide this information. The Tor client creates unique routes through a network of Tor nodes. First the client contacts a node and negotiates an encryption key with it. Once that link has been established the client instructs that node to contact another and get the next key. Once all of these keys have been collected the client can begin encrypting its information. The payload is encrypted by each key in route order. When the first node decrypts the payload it determines where to send it next. The encryption is removed one layer at a time as it travels along the route arriving at its destination fully decrypted.
Tor recently reached 100 verified nodes. If you've got some spare bandwidth why don't you set up a node of your own. You can even use Tor to provide anonymous web services. Of course using Tor will make it more difficult for sites to show you "singles in your area", so make sure you consider the consequences.
1. The problem with Tor is that it's fairly easy to detect and harvest nodes. Thus it's no use in any regime that simply makes running it in the first place illegal. Also the outproxying to the "real" net, although cool, should be a considerable concern for prospective node operators ... I know for a fact Tor was used to crapflood Slashdot till malda banned all the public IPs, and that's pretty harmless compared to the cracking, spamming etc that is probably done through it. I2P is almost as easy to harvest btw.
Posted at 3:05PM on Sep 3rd 2006 by Bob